BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OFINDIA

ADJUDICATION ORDER NO.VKV/DL/AO-66/2016
UNDER SECTION15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT,1992
READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING
PENALTIES BY ADJUDICATING OFFICER) RULES,1995
In respect of:
M/s Napa papers Limited
(PAN-Not Available)
Plant & Machinery Lying At
Vill- Jharmajri Baroti, Baddi Road, Solan
Himachal Pradesh
In the matter of Non-redressal of investor grievance(s)
BACKGROUND
1.

Securities and Exchange Board of India (hereinafter referred to as SEBI) came out
with a Circular dated June03, 2011 dealing with the processing of investor complaints
against listed companies through SEBI Complaints Redress System (hereinafter
referred to as SCORES). In terms of the said Circular, all listed companies were inter
alia required to view the complaints pending against them, redress them and submit
Action Taken Reports (hereinafter referred to as ATRs) electronically in SCORES.
For the purposes of accessing the complaints of the investors against them, as
uploaded in the SCORES, listed companies were required to login to SCORES system
electronically through a company specific user id and password, to be provided by
SEBI. For the purpose of generating said user id and password, listed companies were
required to submit the details for authentication to SEBI, in the format annexed to the
said Circular. However, it was observed that M/s Napa papers Limited (hereinafter
referred to as Noticee/the Company) did not submit the details to SEBI which were
required to be furnished in terms of the said Circular.

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2.

As observed from the contents of the Circular, SCORES introduced electronic dealing
of the complaints of the investors, by the respective companies. Thus, once a
complaint against a company was uploaded by SEBI in the SCORES, it amounted to
calling upon by SEBI to such company to redress the investor grievance. Accordingly,
it was incumbent upon such company to redress the investor complaint. It was
observed that One (01) investor complaint(s) were pending against the Noticee as on
July 20, 2012.

3.

It was alleged that Noticee had not submitted the details for SCORES authentication
as required by the Circular and aforesaid letters thereby did not obtain the user id
and password which was essential for accessing the complaints pertaining to the
Noticee, as uploaded on the SCORES for redressing the investors grievances and
subsequent redressal thereof, within specified time. Thus, it was alleged that Noticee
had failed to redress pending investor grievances which renders the Noticee liable for
imposition of penalty under Section 15C of the Securities and Exchange Board of India
Act, 1992 (hereinafter referred to as 'SEBI Act, 1992').

APPOINTMENT OF ADJUDICATING OFFICER

4.

The undersigned was appointed as Adjudicating Officer, vide order dated September
18, 2013, under section 15-I of SEBI Act and rule 3 of SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter
referred to as Adjudication Rules) to enquire into and adjudge under section 15C
of Securities and Exchange Board of India, Act, 1992 (hereinafter referred to as "SEBI
Act, 1992) for the alleged violations committed by the Noticee.

SHOW CAUSE NOTICE, REPLY AND HEARING

5.

A Show Cause Notice (hereinafter referred to as SCN) was issued to the Noticee
under Rule 4 of Adjudication Rules to show cause as to why an inquiry be not held
against it in terms of Rule 4 of the Adjudication Rules read with section 15I of SEBI

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Act, 1992 and penalty be not imposed under section 15C of SEBI Act, 1992 for the
violation alleged to have been committed by the Noticee.
6.

The said SCN bearing No. SEBI-NRO/AO/VKV/SKG/860/2014 dated March 26, 2014
was sent at the last known address (s) at Plant & Machinaery Lying At, Vill Jharmajri
Baroti, Baddi Road, Distt.- Solan ,Himachal Pradesh of the Noticee through Postal
Department. However, same was undelivered.

7.

In the interest of natural justice and in order to conduct an inquiry in terms of Rule
4(3) of the Adjudication Rules, the undersigned issued a notice of hearing vide
hearing notice no. NRO/AO/VKV/184/2015 dated January 22, 2015. But same was
returned undelivered.

8.

Another opportunity was granted to the Noticee, in terms of Rule 4(3) of the
Adjudication Rules, undersigned issued Notice of Hearing bearing no. SEBINRO/OW/AO/VKV/DL/HN/485/2016 dated March 01, 2016 to the Noticee. The said
Notice of hearing along with a copy of SCN dated February 02, 2016 to attend the
hearing in the matter on March 15, 2016 at SEBI Northern Regional Office (NRO), New
Delhi was sent through Shimla Local office of SEBI for affixation as per the provisions
of Rule 7(c) of the Adjudication Rules.

9.

Shimla Local Office vide its Office note No. SEBI/NRO/SLO/ON/396/2016 dated
March 08, 2016 informed that ..the aforesaid Notice was not allowed to be affixed
since the address of the company as mentioned in the notices was found as premises of
ESS ESS Bathroom Products Pvt. Ltd. While enquiring about Napa Papers Ltd, Shri
Neeraj Tyagi, Manager Commercial ESS ESS Bathroom Products Pvt. Ltd. has informed
that they had acquired this premise from Himachal Pradesh Financial Corporation
(HPFC) on January 27, 2004 as the earlier company was in default in repayment.

10.

Considering the facts and circumstances of the case including the fact that the Noticee
has not availed the opportunity of hearing before the previous Adjudicating Officer,
the undersigned is of the opinion that no prejudice would be caused to the Noticee in

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the given matter if another opportunity of hearing under Rule 4 (3) of Adjudication
Rules is not provided to it.
ISSUE FOR CONSIDERATION

11.

After perusal of the material available on record, I have the following issues for
consideration, viz.,
a) Whether the Noticee has violated the provisions of Section 15C of SEBI Act, 1992?
b) Whether the Noticee is liable for monetary penalty under Section 15C of the SEBI
Act, 1992?
c) What quantum of monetary penalty should be imposed on the Noticee taking into
consideration the factors mentioned in Section 15J of the SEBI Act, 1992?

FINDINGS

12.

On perusal of the material available on record and giving regard to the facts and
circumstances of the case, I record my findings hereunder.

ISSUE 1: Whether the Noticee has violated the provisions of Section 15C of SEBI Act,
1992?

13.

It has already been observed that SEBI introduced an online electronic system for
resolution of investor grievances, i.e., SCORES in 2011. As per SCN once a complaint
against a company is uploaded by SEBI in the SCORES, it amounted to calling upon by
SEBI to such company to redress the investor grievance. For the purposes of accessing
the complaints of the investors against them, as uploaded in the SCORES, listed
companies were required to login to SCORES system electronically through a
company specific user id and password, to be provided by SEBI. I note that SCN dated
02.02.2016 inter alia alleged that by not submitting the details for authentication as
required by the Circular, the Noticee did not obtain the user id and password which
was essential for accessing the complaints pertaining to the Noticee, as uploaded on
the SCORES for redressing the investor grievances and subsequent redressal thereof.

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14.

I note that Honble Securities Appellate Tribunal in the matter of Port Shipping
Company Ltd. vs. SEBI decided on 29.04.2015 observed as follows:
.. As held by this Tribunal in case of M/s. Vidarbha Industries Ltd. (supra) and Ratan
Steels (supra) where a listed company fails to obtain SCORES authentication within the
time stipulated by SEBI, then it amounts to violating the directions of SEBI and in such
a case penalty is imposable under section 15HB of SEBI Act..

15.

I, however, note that instant adjudication proceedings are under Section 15C of SEBI
Act, 1992 and not under Section 15HB of the SEBI Act, 1992.

16.

The provisions of Section 15C of the SEBI Act, 1992, read as under:
15C Penalty for failure to redress investors grievances: If any listed company or
any person who is registered as an intermediary, after having been called upon by the
Board in writing, to redress the grievances of investors, fails to redress such grievances
within the time specified by the Board, such company or intermediary shall be liable to
a penalty of one lakh rupee for each day during which such failure continues or one
crore rupees, whichever is less.

17.

In the instant matter, the Noticee has not obtained SCORES authentication which as
per SCN was essential for accessing the complaints. Thus, the requirement under
Section 15C of the SEBI Act, 1992 which states that .. After having been called upon
by the Board in writing remains unfulfilled.

18.

Since the requirement under Section 15C of the SEBI Act, 1992 remains unfulfilled
as aforesaid, the allegation that the Noticee has violated the provisions of Section
15C of the SEBI Act, 1992 is not tenable.

ISSUE 2: Whether the Noticee is liable for monetary penalty under Section 15C of the
SEBI Act, 1992?

19.

In view of the finding at para 17, the Noticee is not liable for monetary penalty under
Section 15C of the SEBI Act, 1992.

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ISSUE 3: What quantum of monetary penalty should be imposed on the Noticee taking
into consideration the factors mentioned in Section 15J of the SEBI Act, 1992?

20.

Since the Noticee is not liable for monetary penalty in the instant matter, this issue
deserves no consideration.

21.

In view of my findings noted in the preceding paragraphs, I hereby dispose of the

Adjudicating Proceedings initiated against M/s Napa papers Limited vide Show
Cause Notice dated March 26, 2014.

22.

In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules 1995, a copy each of this order is
being sent to M/s Napa papers Limited and also to Securities and Exchange Board
of India.

Date: 16.03.2016

Vijayant Kumar Verma

Place: New Delhi

Adjudicating Officer

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March 16, 2016